New Zealand’s top trade official is flying to Britain to be there when Britain proposes to leave the EU on March 29 to deal with any threats to New Zealand’s lamb exports.
In recent weeks British farmers and a key Cabinet Minister have called for massive tariffs to be placed on New Zealand lamb.
POLITIK understands that the Ministry of Foreign Affairs and Trade is so concerned about the threats that it wants its Deputy Secretary, Trade and Economic, Vangelis Vitalis, on the ground in London as Britain quits the EU.
The British have called for WTO tariffs on New Zealand lamb which currently enters the country free of tariff up to a specified tonnage.
Those tariffs run at 40%.
The call was made by the Environment and Food Minister, Michael Gove, last week in response to complaints from British sheep farmers who fear they will be locked out of the EU market by high tariffs but will not be able to sell their product in the British market because New Zealand’s more efficient sheepmeat producers will undercut them.
Originally the British farmers wanted a subsidy to slaughter their stock.
But now they – and it appears, their Government — are talking tariffs.
However, New Zealand trade sources believe there is a workaround available for New Zealand.
Currently, New Zealand has an agreement with the EU called a “tariff rate quota” which specifies that it may export lamb each year free of tariff to the EU.
At present New Zealand exports just over $2 billion worth of red meat to the EU, most of it sheepmeat.
It has a tariff-free quota of 228,000 tonnes of sheepmeat a year, although it virtually never fills it.
About 55 per cent of the sheepmeat is consumed in 27 EU countries, and 45 per cent in the UK.
That quota is to be split between the EU and Britain under an agreement brokered through the WTO once Britain leaves, and though there is considerable controversy about how the split is being calculated, New Zealand believes it will still apply to Britain once it leaves the EU.
That would mean the British could not apply any tariffs to New Zealand imports.
But Gove, speaking six days ago at the British National Farmers’ Union conference said:” One thing I can reassure you is that it will not be the case that we will have zero rate tariffs on food products. There will be protections for sensitive sections of agriculture and food production.
“You (farmers) have argued that we need tariffs on sheep meat, beef, poultry, dairy, both milk and cheese; and pig meat in order to safeguard domestic production,” he said.
“Your concerns have been heard, and an announcement on new UK tariffs in a no-deal scenario – with specific and robust protections for farming – will be made shortly.”
Gove said the government also had the power to intervene to provide direct cash support to the most vulnerable sectors.
“I will not hesitate to provide the support required,” he added.
That is why MFAT are taking no chances.
New Zealand has not won the tariff rate quota argument in the long term. It still objects to the way the EU and Britain are splitting the quota, and POLITIK understands that if the matter cannot be resolved in a free trade agreement between the UK and New Zealand, then the Government will take a case against Britain to the World Trade Organisation.
But in the meantime, the lower quota stands to protect New Zealand exporters against Grove’s tariffs.
Meanwhile, New Zealand meat exporters have been advised to send as much stock as they can to Britain before it leaves the EU in the likely event that its customs and border protection services are unable to cope with the mechanics of the departure.
